Global growth would see a slight improvement compared with previous IMF projections, but “many challenges still cloud the horizon, and it is too early to celebrate,” the organization’s chief economist said on Tuesday.
IMF economist Pierre-Olivier Gourinchas gave his assessment as the organization projected that global economic growth would slow to 3 percent this year and next year, down from 3.5 percent last year.
The latest projection reflects an increase of 0.2 percentage points from its April forecasts, when IMF leadership said the world economy was expected to grow less than 3 percent this year, increasing the risk of hunger and poverty globally.
Photo: AP
Despite the slight improvement, global growth “remains weak by historical standards,” an IMF report said.
However, Gourinchas said in a blog post on Tuesday that “in the near term, the signs of progress are undeniable.”
The IMF also predicted that global inflation would fall from 8.7 percent last year to 6.8 percent this year and 5.2 percent next year.
IMF economists said that when the US was able to fend off an unprecedented default by resolving the debt ceiling standoff earlier this summer, that in part “moderated adverse risks to the outlook.”
However, the threat of higher inflation due to Russia’s invasion of Ukraine and extreme weather could lead central banks to hike interest rates or cause world leaders to enact more restrictive economic policies, the IMF said.
In addition, China’s slow recovery following the reopening of its economy after the COVID-19 pandemic “shows signs of losing steam,” it said.
The IMF lifted its outlook for US growth this year to 1.8 percent, up 0.2 percentage points from April, but expects it to slip to 1 percent next year.
Citing positive economic news from the UK, the IMF lifted its growth forecast for this year to 0.4 percent, leaving Germany as the only G7 economy expected to contract this year.
The IMF’s growth forecast for China was unchanged at 5.2 percent this year, while India’s growth prospects would rise to 6.1 percent, up 0.2 percentage points from April.
Additional reporting by AFP
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